Hi Girish, nice write up and thanks for posting. Was going through the Annual report after reading this. Two questions - in their BS, they have large receivables outstanding and there is something called as Prepaid Card loading. These together are essentially why it is not generating enough Fcf. Any idea what this Prepaid Card loading (recognized as asset) is and the reason for large receivables? Apart form that business wise, Zaggle does solve a problem that corporates have and plus there would be switching costs involved once it is completely integrated into their system. So the levers for growth are there. So i did not quite understand, what you mean by "I would wait for the company to build deeper working on inventory provider or at the consumer end with more clear value addition to be a serious fintech player." - Could you please elaborate?
I belive it comes from “reward and employee benefits platform”.
Prepaid cards with loading - With my minimum understanding, this should be one-time use pre-paid card from merchants that they sell in the propel platform(like amazon gift card).
Basically, the Propel company needs to own the inventory for a short time frame and the growth in Propel is relatively large in recent times, which explains why receivables have been increasing. I believe the company is aware of this which is why they want to calibrate the growth of Propel.
Why they need deeper integration
I can not call a company that just provides integration between Banks and ERP can not be called fintech from my perspective they could be replaced by any one of them. I would expect them to have a deeper value chain to avoid them to be replaced by
ERP solution providers see that corporations are willing to spend money in good quantity they could develop solutions as part of the ERP solution.
Banks could extend part of corporate account service as a value-added service to make them preferred bankers.
Players like Sodexo who have deeper sales relationships with corporations could extend the service Zaggel provides.
Hi Girish, nice write up and thanks for posting. Was going through the Annual report after reading this. Two questions - in their BS, they have large receivables outstanding and there is something called as Prepaid Card loading. These together are essentially why it is not generating enough Fcf. Any idea what this Prepaid Card loading (recognized as asset) is and the reason for large receivables? Apart form that business wise, Zaggle does solve a problem that corporates have and plus there would be switching costs involved once it is completely integrated into their system. So the levers for growth are there. So i did not quite understand, what you mean by "I would wait for the company to build deeper working on inventory provider or at the consumer end with more clear value addition to be a serious fintech player." - Could you please elaborate?
Receivables and other current assets
I belive it comes from “reward and employee benefits platform”.
Prepaid cards with loading - With my minimum understanding, this should be one-time use pre-paid card from merchants that they sell in the propel platform(like amazon gift card).
Basically, the Propel company needs to own the inventory for a short time frame and the growth in Propel is relatively large in recent times, which explains why receivables have been increasing. I believe the company is aware of this which is why they want to calibrate the growth of Propel.
Why they need deeper integration
I can not call a company that just provides integration between Banks and ERP can not be called fintech from my perspective they could be replaced by any one of them. I would expect them to have a deeper value chain to avoid them to be replaced by
ERP solution providers see that corporations are willing to spend money in good quantity they could develop solutions as part of the ERP solution.
Banks could extend part of corporate account service as a value-added service to make them preferred bankers.
Players like Sodexo who have deeper sales relationships with corporations could extend the service Zaggel provides.
Hope this helps.